China’s One Belt, One Road (OBOR) initiative has been gaining attention since its proposal by President Xi Jinping in 2013, along with the recent Asia Infrastructure Investment Bank and the Silk Road Fund.
OBOR has been proposed as an innovative method of cooperation in global governance in the face of a worsening economic climate and simmering geopolitical problems worldwide. This solution follows eight years of slow recovery since the financial crisis of 2008, which arguably witnessed the failure of “neo-liberalism” and its infamous economic reform recipe enacted by the “Washington Consensus.” China’s economic growth might give the world its only hope, with an annual GDP increase of 7% that contributes over 30% to global economic growth.
The dire prospects for global development and the re-emergence of geopolitical troubles in the Middle East, Ukraine and elsewhere are pressing for elusive answers. What should we do to promote global peace and common development in the age of fast-paced globalization?
Given the reality of the world today, what is so innovative and trailblazing about OBOR? Can it really offer a way out of the quagmire in which the world finds itself? I will try to illustrate my points as follows.
First, founded in the idea of building a new network of global partnerships, OBOR provides a fresh way of thinking about regional and global cooperation, by including both bilateral and multilateral cooperation in political, economic, cultural and other fields. It emphasizes the adaptability of development strategies in China and other participating nations, in order to produce benefits that are shared by all in an economic “win-win” outcome.
In a nutshell, OBOR envisions the creation of multiple economic corridors encompassing more than 60 countries in East Asia, Southeast Asia, Central Asia, South Asia, West Asia, North Africa and East Africa, linking the most dynamic East Asia Economic Zone with the advanced European Economic Zone. If we visualize OBOR, it is an economic partnership map with multiple interconnected rings.
President Xi describes OBOR as a “chorus”, not a soloist singing. OBOR transcends different Free Trade Agreements (FTAs), including the newly concluded TPP, in both scale and content. It envisions regional integration beyond pure economic union, forming a political community founded on common interest in an attempt to forge, as much as possible, a common cultural identity.
Second, OBOR looks to build “five connectivities” with a view of creating a community of nations with a common destiny. These “five connectivities” include policy consultation, infrastructure connectivity, free trade, free circulation of local currencies, and people-to-people connectivity. In sum, these connectivities denote the “big trends” in economic globalization and socialization, the information revolution, and shared economic growth.
Policy consultation is placed first in the OBOR plan, because its success depends on the participants’ adoption of parallel development strategies and policies. Regular policy consultations align participants’ economic growth strategies, macro-economic policies, and major growth plans.
The importance of infrastructure connectivity is easily understood, since OBOR’s economic growth and regional economic integration depends on the sophistication and connectivity of both “hard and soft” infrastructures.
Free trade is necessary for OBOR in that Asia as a whole needs to upgrade its place in global production and value chains, with a freer and more integrated production network that embraces individual countries’ advantages. Free trade should also come into play with regional production capacity realignment, i.e., moving excessive production capacity to countries that are in need to build up their own economic frameworks. The end result will be a more open regionwide economic system.
Free circulation of local currencies will be integral to the new economic structure OBOR creates. The Asia Infrastructure Investment Bank (AIIB) and the Silk Road Fund have shown the way to global financial system reforms and offer a new avenue of infrastructure investment funding. According to the Asia Development Bank, from 2010 to 2020 there was an $800 billion gap in Asia Infrastructure funding. Mackenzie Consultancy estimates that over the next two decades the global need for infrastructure funding will amount to a staggering $57 trillion. Intraregional free trade and infrastructure funding will enable a more efficient use and circulation of currency in the involved countries, thus reducing or avoiding the risks associated with a complete dependency on a U.S. dollar-centered financial system for project funding.
People-to-people connections result from more frequent exchanges at all levels and create a common cultural identity and affinity that will go a long way in providing a solid social foundation for building OBOR. People will only accept and engage with OBOR when they get to know other ethnic groups better.
Third, OBOR is not only a great opportunity for China to further her opening-up and reform, it also provides a large, multi-layered platform all countries along OBOR can use to reap greater economic and social benefits by opening up to one another. It is clear that China will be one of the major economic engines in the first half of the 21st century, with projected outward investments of $500 billion and over 500 million outbound tourists in the next five years. “Made-in-China,” Chinese capital, China’s market, and Chinese consumers will be hallmarks in the new round of worldwide economic growth.
Fourth, OBOR will be the cushion for China and the United States, as rising and incumbent powers seek to avoid falling into the proverbial “Thucydides Trap”: The Belt and Road initiative will help both nations in a profound manner to have an appropriate strategic assessment of each other’s intentions, by showing China can create solid cooperation in a strategically significant region. OBOR is also useful, as it involves both countries in policy consultation and economic collaboration, shaping the future of our bilateral relations.
I am happy to note that after the historic visit to the U.S. by President Xi, President Obama’s administration has reversed its position on OBOR and the related AIIB, adopting a more open and welcoming attitude. This year, as we celebrate the 70th anniversary of the founding of the United Nations, all nations big and small are reminded that it is necessary to improve the current global governance system. I am convinced that with joint efforts and determination, OBOR will prove its worth to China and its participants, including the United States, as a new path to mutual trust and a better future in global governance.